Zerodha Educate

In the first part of our conversation we spoke about absolute basics of factors investing and dove deep into the two major factors — low volatility (low vol) and momentum. We spoke about why these factors exist and the explanations, return expectations, and how to use them in an asset allocation framework. For this episode, we focused on the other two factors—value and quality. We talk about how value as a factor is different from the popular "value investing", how to really measure the value and how to implement them. We also covered what is meant by quality, why it works and if it's a real factor. Sankaranarayanan Krishnan is a quant fund manager at Motilal who has rich experience designing factor models and managing factor funds. We hope you enjoy listening to this conversation

Asset allocation is one of those fancy-sounding terms. We all keep hearing about it non-stop everywhere, but very few investors think about it, and even fewer have a sensible asset allocation that works for them. At its simplest, asset allocation is not putting all your eggs in the same basket. In other words, it’s about spreading your money across different asset classes like equity, debt, gold, and real estate. This naturally leads to the question: how do I figure out a good asset allocation. Asset allocation is as much a science as it is an art. The objective of asset allocation is to help you reach your financial goals. Coming back to the question of how you figure out a good asset allocation, there’s no perfect asset allocation that’s objectively good for everyone. There are multiple approaches, and each has its own pros and cons. For example, a naive asset allocation that has equal allocation to different asset classes is a perfectly sensible strategy in the right context and for the right type of investor. In this episode, we caught up with Ashutosh Bhargava, fund manager and head of research at Nippon India Mutual Fund. Ashutosh manages the Nippon India Balanced Advantage Fund, among other funds. Given the nature of the fund, he’s thought deeply about the concept of asset allocation and its various dimensions. In this conversation, we talk about: His background and how he stumbled on asset allocation Various approaches to asset allocation Static asset allocation vs. dynamic asset allocation Selecting the right parameters to guide asset allocation decisions and their trade-offs  

Dark patterns are tricks used by applications and websites to make users do things they don't want to. They rely on exploiting our behavioural biases and cognitive limitations. We all encounter dark patterns in our daily lives, like: 1. Making it easy to subscribe but hard to unsubscribe. 2. Pre-selecting actions like purchasing insurance, offering tips, payment methods etc. 3. Some e-commerce platforms "sneak" new items that you didn't choose just before the payment step. 4. Hiding or obscuring important details. 5. Using scary and fearful language. In this conversation, Ashish Aggarwal (head of public policy at NASSCOM), Kailash Nadh (CTO at Zerodha) and Bhuvanesh R (Zerodha) discuss how dark patterns are harmful for users and the kind of regulations that must surround them. The entire transcript of this conversation is available here.

Trading is one of the most stressful activities. It's a also very lonely activity. Every second there is a change in your profit and loss which leads to happiness, sadness, stress anxiety, and a cocktail of other emotions making trading an emotional roller coaster. On the occasion of #WorldMentalHealthDay, Dr. Preeti, a clinical psychologist at Lissun, chats with Abid Hassan, founder of Sensibull. They dive into why prioritizing mental health is a game-changer for traders aiming for long-term success in the markets.

Financial influencers or finfluencers have become incredibly popular in the last 4–5 years. While there are a lot of amazing people who teach people about trading and investing, there are many that sell greed and set wrong expectations. SEBI recently came up with a consultation paper on regulating finfluencers. In this video, Nithin, Abid (Co-founder & CEO of @BeSensibull) and Sandeep Parekh (Managing Partner of Finsec Law) discuss the issue of finfluencers, SEBI's consultation paper and the challenges of regulating them. Check out this post for the transcript and relevant links.

Thomas Carlyle, the Scottish writer and philosopher, called economics the dismal science. I don’t know if you’ll agree but having read economics textbooks, I certainly think they’re dismal. They’re filled with unnecessary complexity, pointless jargon and theories that have been dead and buried for decades. While economics as a discipline has progressed, the textbooks used today are stuck in the dark ages.     Then I came across Macroeconomics: An Introduction by Alex M Thomas and I regretted not having this as my textbook when I was studying. Though it’s meant to be a textbook, it doesn't read like one. It’s a brilliant book that weaves classical economic theories with excerpts from wide-ranging Indian literature to highlight the structural, social and cultural complexities of the Indian economy. It’s one of the very few books to do so.  Apart from just making macroeconomics more relatable Alex introduces an alternative approach to understanding macroeconomics, which questions the dominant (marginalist) approach. This alternate approach is inspired by the works of the old masters like Adam Smith, David Ricardo, Karl Marx, John Maynard Keynes, and Piero Sraffa.   I learnt a lot while recording the podcast. I hope you enjoy listening to the conversation as much as I enjoyed recording it.    Link to the book: https://www.amazon.in/Macroeconomics-Introduction-Alex-M-Thomas/dp/1108731996  1:27 - About Alex M Thomas  4:51 - What is political economy?  6:35 - Theory of interest rates  10:11- Why should you read this book?  11:29 - The problem with economic teaching  14:41 - How is this book different?  15:41 - The dominant (marginalist) approach  18:57 - How to approach economics  22:32 - The economy as an embedded system  26:10 - Theory of wages  29:52 - Marginalist theory in policymaking   34:15 - Theory of money 44:15 - Modern monetary theory You can read the full episode transcript here. If you have any questions or thoughts about the topics in the conversation, post them on TradingQnA. If you enjoyed listening to this episode, do let us know @zerodhaonline on Twitter.

In the last 15 years, Indian asset management has grown leaps and bounds. One of the amazing success stories of this period has been Mirae Asset management, which is best known for its well managed equity funds.  In this episode, I caught up with Swarup Mohanty, the CEO of  Mirae Asset Investment Managers (India). Swarup has been at Mirae since day 1 during a period when both Mirae and the Indian markets have grown immensely. I hope you enjoy listening to the conversation as much as I enjoyed recording it.  In this episode, he speaks about:  0:00 - Introduction  2:55 - Influx of young investors into the markets  5:55 - The evolution of Indian asset management  10:15 - Thoughts on the current market cycle  15:05 - The biggest mistakes investors make  20:55 - What’s it like to be the CEO of Mirae?  26:15 - Performance chasing  31:17 - Are there too many AMCs in India?  34:14 - Active vs passive   If you have any questions or thoughts about the topics in the conversation, post them on TradingQnA. If you enjoyed listening to this episode, do let us know @zerodhaonline on Twitter.

We are at an important crossroads in history. The pandemic might seem like it’s behind us but we have a raging war in Europe, unprecedented sanctions, currency crises, inflationary pressures, and volatile markets. There are early signs of a shift away from the dollar and uncertainty about the US led global order. So what does all this mean for India and the world? We caught up with Debashish Bose, Managing Director—Public Equities at Oaks Asset Management, to make sense of it all. In this conversation, Debashish talks about:   1. How money is created in the modern world  2. The geopolitical divide  3. Fall of Yen and Japan’s currency conflict  4. Limited power of central banks   5. Cracks in the current dollar-dominated system  6. Advice for investors and much more Debashish had come on the show previously and we had talked about making sense of the macroeconomic developments in the world. You can check out that conversation here: You can follow Debashish on Twitter for more. We hope you enjoy this insightful conversation as much as we did, recording it 😀   Timestamps  0 - Introduction   1:34 - Creation of money   10:14 - Financial repression   11:50 - The geopolitical divide   16:33 - Japan’s currency conflict   27:43 - Do central banks have enough power?   32:34 - Is the dollar system breaking?   40:10 - China, Russia and deglobalisation   47:46 - Bretton woods III?  55:00 - What to do as an Indian investor   1:08:30 - What about gold? If you have any questions or thoughts about the topics discussed, post them on TradingQnA. If you enjoyed listening to this episode, do let us know at @zerodhaonline on Twitter.

Up until the 1990s, the Capital asset pricing model (CAPM) was the dominant model used to explain market returns. But in 1992 Nobel Laureate Eugene Fama and his partner, Ken French said that market returns can be explained by three factors namely: 1. Value: the tendency of cheap stocks to outperform costly stocks 2. Size: the tendency of small cap stocks to outperform large cap stocks 3. Market factor: the risk premium of the market over the risk-free rate, like a government bond. Over a period of time, other factors like quality, momentum, and low volatility were added. Institutions were the first to adopt factor investing but with the popularity of ETFs, around 2010, factor ETFs also known as smart beta ETFs started becoming popular in the United States. Given that Indian markets are still very young compared to the US, we just had our first wave of factor or smart beta funds around 2017. But in the last 3 years, there has been an explosion in factor ETFs and mutual funds. But investors often think of factor investing as a guaranteed way to generate higher returns than the market. They often look at the historical returns of factors like value, momentum, quality, and low volatility and think that these factor funds will always outperform Nifty, which isn’t true. Having said that, factor investing can play a very important role in your portfolio, and it’s important to know how to use these funds in your asset allocation. This week on the show, we caught up with Sankaranarayanan Krishnan, a quant fund manager at Motilal who has rich experience designing factor models and managing factor funds. In this conversation, we start with the absolute basics of factors investing and talk about two major factors — low volatility (low vol) and momentum. We talk about why these factors exist and the explanations, return expectations, and how to use them in an asset allocation framework. In this conversation, Sankar talks about:  How did he become a quantitative fund manager What are factors What drives the returns of factors Will factors continue working forward? Factor performance in India Are factors free lunch? Introduction to low volatility and momentum Why do low volatility and momentum anomalies exist Does the macroeconomic environment matter for factors? What would make low volatility and momentum stop working? Various approaches to implement low volatility and momentum strategies and what investors should know Are factors replacement for active funds? Factors funds, diversification and asset allocation Will factors always outperform marketcap-weighted indices? His personal investing philosophy Career advice for someone who wants to pursue opportunities in quantitative finance Book recommendations.  This was an absolute masterclass on factor investing, and we hope you enjoy listening to this conversation as much as we did recording it. We have an upcoming episode on the other two factors—value and quality. We also have an introductory note on smart beta funds on Varsity, do check it out.  If you have any questions about anything discussed in the episode or thoughts in general, do post them here on TradingQnA. If you enjoyed listening to this episode, do let us know by tweeting, we are @zerodhaonline

What does it take to survive multiple market cycles and create wealth?  This week, we have a really, really special guest. I caught up with Sankaran Naren, one of India's most admired and well-known fund managers, and the chief investment officer (CIO) of ICICI Prudential AMC. In this conversation, we spoke about his 3-decade career in the Indian markets as an investor, broker, and fund manager. He's perhaps best known for his contrarian style of investing that has helped him create immense wealth for investors. This conversation was nothing short of a masterclass on investing, and I hope you enjoy listening to it as much as we did recording it. In this conversation, Naren speaks about: How he discovered the stock market. His thoughts on the current market cycle and the similarities if any between the 2008 crash and the 2000 dot-com burst.  What makes him optimistic about India. Contrarian investing and value investing.  The influence of central banks on the financial markets.  IPOs of new-age companies. Corporate governance in India.  Asset allocation and the role of gold, debt, and international stocks.  Asset management. How he invests personally and his investing philosophy. Career advice for people who want to enter finance.  Book recommendations.  If you have any questions about anything discussed in the episode or thoughts in general, do post them here on TradingQnA.

One topic we keep talking about on the podcast is debt funds. As we've alluded to numerous times in the show, most investors focus too much on the equity part of their portfolio and ignore the debt part. They often take debt for granted and invest based on recommendations or based on whatever partial understanding they have. This often ends up backfiring whenever there are bad phases in the debt markets like the IL&FS, DHFL, and Franklin episodes.  The other risk that investors don't pay much attention to is the interest rate risk. Rising interest rates are bad for debt funds, and falling rates are good for debt funds. Given the strong inflationary pressures, RBI has hiked interest twice over the last month, and that has led to the debt fund NAVs falling. Predictably, over the last 3 odd months, the most common query from mutual fund investors was, “why are my debt fund NAVs falling?.” So we caught up with Mahendra Jajoo, the CIO of Fixed income Mirae Asset India. In this conversation, Mahendra talks about: What's happening in the debt markets Why are debt fund NAVs falling Why are interest rates rising What's causing inflation? Why have debt in your portfolio? How should investors invest in a rising rate environment Tips on building a debt portfolio and much more Hoep you find this useful. 

Retirement is the ultimate goal for everyone. We work, save, and invest so that we can kick back and retire comfortably, but a vast majority of Indians aren't ready for their retirement. This is due to structural economic issues, lack of awareness about the need for retirement planning, the lack of quality advice, among other reasons. PGIM India Mutual releases an annual survey of retirement readiness among Indians, and the last one was in 2020. Given that we're living through this mega COVID shock that has disrupted the personal finances of pretty much everybody, we thought it would be the perfect time to talk about the importance of retirement. So Sahil caught up with Ajit Menon, the CEO of PGIM India Mutual.  In this conversation, Ajit talks about: What does retirement mean The good, bad, and the ugly from the PGIM India Mutual Fund Retirement Readiness Survey 2020 Why are Indians saving less? How has COVID changed retirement planning Why should you think about retirement? Thinking about how to structure various aspects of your retirement How to build that mindset to think about retirement readiness Retirement readiness around the world Advice for someone starting to think about retirement today And a whole lot more. This conversation was absolutely brilliant and full of insights. We hope you enjoy it as much as we did recording it.  If you have any questions about anything discussed in the episode or thoughts in general, do post them here on TradingQnA.

The way the markets have run up post the March 2020 crash have equally surprised and perplexed investors. Given the pace of the recent bull run, that's understandable. A lot of smart people are wondering what's happening in the markets. But that's how the markets work—they don't have to make sense and they rarely do. So, we caught up with Kalpen Parekh (MD & CEO, DSP Mutual Fund) and Sahil Kapoor (Head of Products & Market Strategist, DSP Mutual Fund) to get a sense of the madness in the markets and what you should do as investors:  In this conversation, Kalpen and Sahil talk about: Some key takeaways over the last 1-1.5 years How to make sense of inflation The disconnect between the real economy and the markets A bird's-eye view of the Indian and the global economy Are the markets in a bubble? Investing in the age of markets where central bank actions have a massive impact Why do investors stop investing in equities early?  What can be done to get people to stick with their investments How not to get carried away by all the madness around Asset allocation How to think about fixed income in a low-interest rate environment Keeping your behaviour in control and avoiding mistakes Can you pick the best fund or best fund manager in advance? Discussing Sahil's article on this.  International investing and the role of global funds in a portfolio The role of gold in a portfolio How the Indian mutual fund industry looks in the next 5-10 years Sahil and Kalpen's investment philosophies Book recommendations You can follow Sahil and Kalpen on Twitter for more of their perspectives.  If you have any questions about anything discussed in the episode or thoughts in general, do post them here on TradingQnA. 

The CFA Society India recently published the second edition of The Investor’s Guide to Shareholder Meetings in India. As investors, even though we hold stocks of various companies, we rarely think about our rights. Investors also rarely realize that by virtue of the shares they hold, they are entitled to voting rights in a company. It's a chance for them to question the management and engage with them so that they aren't taken for granted as minority shareholders.  So we caught up with Sivananth Ramachandran, CFA, Director of Capital Markets Policy (India) and Amit Tandon, Founder and Managing Director, IiAS, who worked on the report to talk about:  The objective behind publishing the report Shareholder meetings post-COVID Basics of shareholder meetings Why don't retail investors attend these meetings Evolution of corporate governance in India Do the votes of retail investors count? Things to look for when analysing shareholder proposals put forth by companies ESG investing and the role of shareholders Shareholder activism and ESG Shareholder meetings in India vs other countries and a whole lot more.  Please enjoy this conversation with Sivananth and Amit.  Here's the link to the An Investor's Guide to Shareholder Meetings in India. If you have any questions about shareholder meetings and shareholder rights, do post them here on TradingQnA. 

In this episode, we have a really really special guest. We caught up with Prashant Jain, the chief investment officer (CIO) of HDFC Mutual Fund. Prashanth is a market veteran and the first India fund manager to manage a single mutual fund scheme for over 25 years. He manages some of the largest active mutual fund schemes in India. Over his nearly 25+ year career in the investment management industry, Prashant has pretty much seen all the cycles of the Indian markets. The experience and insights he shared in the conversation are all the more relevant to us given the euphoric mood in the Indian markets currently.  In this wide-ranging conversation, Prashant spoke about:  His journey into the markets The evolution of our economy and the Indian markets What does a good business look like to him His research process His thoughts on portfolio construction What does being wrong look like His thought on using macro inputs in an investing framework Whether the opportunity set of stocks in Indian markets is limited The road ahead for India His thoughts on quality at any price Active investing vs passive investing Indian valuations, global valuations, rates and inflation Advice for aspiring analysts and portfolio managers How he invests If you have any questions about this episode, you can post your queries here and we'll answer them. Disclaimer: Mutual fund investments are subject to market risks. Please read all scheme related documents carefully before investing. This show is for informational and educational purposes only and should not be construed as investment advice or a solicitation to invest. Please consult your financial advisor before making any investment decisions.

Gold is probably one of the most controversial and perplexing asset classes. Some well-known investors like Warren Buffett call it useless while other investors take the middle path and recommend small allocations. As for investors, they often struggle to think about it in a portfolio construct. So we caught up with Chirag Mehta, senior fund manager at Quantum Asset Management who also manages the Quantum Gold Fund.  In this conversation, Chirag talks about:  His journey into the markets His perspective of what happened in the markets last year What moves gold prices Why do Indians love gold so much? Historical performance of gold in India vs equities and bonds Pros and cons of various gold options like physical gold, gold ETFs, Sovereign Gold Bonds, Gold Mutual Funds etc What roles gold plays in a portfolio How much to invest in gold His thoughts on some popular arguments against investing gold Central banks actions and their impact on gold going forward How do Indian gold ETFs and Mutual Funds manage their gold, where do they store it, safety measures etc Things to keep in mind when picking gold funds His personal investment philosophy Some unique stories from his career Some reading recommendations You can explore gold mutual funds on Coin and gold ETFs on Kite.  If you have any questions about investing in gold, you can post your queries here and we'll answer them.  Disclaimer: Mutual fund investments are subject to market risks. Please read all scheme related documents carefully before investing. This show is for informational and educational purposes only and should not be construed as investment advice or a solicitation to invest. Please consult your financial advisor before making any investment decisions. 

In part 1, Rishad gave a quick intro to personal finance if you are new to investing. The pandemic has put a lot of stress on people's finances. So in part 2, we decided to focus on how to manage your personal finances in these challenging times.  In this part, Rishad talks about His experiences with investors during the pandemic How to prepare your finances in these difficult times Basics of health insurance Importance of having nominees for your investments and other accounts How to prepare for eventual market downturns How to think about philanthropy if you have the financial ability to help people in these trying times

Millions of new investors have started investing post-pandemic, and this is a good thing. But given that the returns in the past year have been spectacular, many new investors continue to make the same old mistakes and have wrong expectations. They tend to take the basics for granted. While pretty much anything investors do will work out in a bull market, these mistakes can come back to haunt them when the markets take a turn for the worse. We've spoken about how to think about investing, how to pick mutual funds and build a portfolio (part 1, part 2) in previous episodes but not much about personal finance. So we caught up with Rishad Manekia of Kairos Capital. Rishad is a Registered Investment Advisor and helps people simplify their personal finances. In this first of a 2 part series, Rishad gives you a blueprint of sorts on the basics of personal finance so that you can start your investing journey on the right foot.  In this conversation, Rishad talks about: The right mindset for investors The first step in personal finance How to budget How to set goals How to invest for short term and long term goals Figuring out the right asset allocation for various goals Basics of insurance How to manage your behaviour during bad market phases How to review and maintain your personal finance plan The most common mistakes he sees investors make Do check out the personal finance chapter on Varsity, and If you have any questions about personal finance, please do post them here.

We recently did a Twitter live session with Amit Grover, the Head - Learning & Development, DSP Mutual Fund on the right way to invest in Equity Linked Savings Schemes (ELSS) or tax-saving mutual funds. When you invest in an ELSS mutual fund, you can claim a tax deduction on investments up to Rs 1.5 lakhs and you can save up to Rs ₹46,800 in taxes.  In this chat, Amit answers: What are ELSS funds and how do they work For how long should you invest in an ELSS mutual fund ELSS funds vs other tax saving options like PPF, tax-saving fixed deposits etc How to analyse an ELSS fund The important factors to keep in mind when choosing an ELSS mutual fund and more.  You can visit Coin to explore ELSS Funds.  If you have any questions about investing in ELSS Mutual Funds, you can post your queries here and we'll answer them. You can keep track of all the live weekly Coin Chats on Twitter.  

Though the momentum effect is widely known in developed markets like the US, it's still relatively unknown in India. Over the past few years, there's been growing interest in the momentum style of investing. UTI Mutual Fund recently launched India's first momentum index fund which tracks the Nifty 200 Momentum 30 Index. But investors often extrapolate the past returns of momentum as a style and tend to think that momentum will always deliver superlative returns.  So we caught up with Aman Singhania, the Vice President & Head of Index Development & Research at NSE India. In this conversation, we talk to Aman about: His journey into the markets What is the momentum style of investing Why does the momentum effect persist How is momentum measured How have momentum investing fared historically in the Indian markets Are market capitalization-weighted indices momentum oriented in disguise? Multi-factor investing How should investors think about momentum His investing philosophy You can also check out the Varsity chapter on personal finance to dive deeper. If you have any questions, please do post them here.